Facts of the case

Shippers sued the ocean carrier and rail carrier it used to ship products from China to the United States in a California state court to recover for damages. During the transport of the shippers' products, a train derailed damaging the products. The case was removed to a California federal district court only to be dismissed. The district court held that the contracts between the parties did not cover claims for cargo damage.

On appeal, the U.S. Court of Appeals for the Ninth Circuit held that the district court erred in its analysis. The court reasoned that the Carriage of Goods by Sea Act ("COGSA") does not govern the inland transport of goods, unless the parties opted out of coverage by the Carmack Amendment to Interstate Commerce Act. The Carmack Amendment governs damage claims against motor and rail carriers, and narrowly limits the venues in which such suits can be brought. Because the district court did not consider whether the parties opted out of the COGSA by the Carmack Amendment, the Ninth Circuit remanded the case for that determination.

Question

Does the Carmack Amendment apply to the inland leg of an international shipment?

John G. Roberts, Jr.:

Anthony M. Kennedy:

In these cases, cargo owners wanted to ship goods from China to the United States and the United States destinations where points in the Midwest.

To arrange the shipment the cargo owners contracted with “K” Line.

Now “K” Line operates ocean vessels and the documents the parties use for the shipment, documents they sign with “K” Line cover the shipment from China to the final delivery point in the United States and that’s why they are called through bills of lading.

The bill of lading is for the entire journey.

To complete the shipment in the United States, “K” Line subcontracted with Union Pacific Railroad Company, so after the “K” Line shipped the goods in one of its own vessels from the China to California, it then transferred the cargo to Union Pacific.

Union Pacific began the rail segment of the shipment but the cargo was allegedly destroyed when the chained train derailed in Oklahoma.

The cargo owners sued, they sued in a California Court.

“K” Line and Union Pacific said, well you can't bring the suit in California because there is a bill of lading and the bill of lading says that through the bill of lading says that you must sue in Japan.

The United States District Court for the Central District of California ruled for “K” Line and the Union Pacific.

It held the suit had to be dismissed because the Tokyo, Japan, forum selection clause was enforceable.

The United States Court of Appeals for the Ninth Circuit reversed.

It concluded that a Federal statute which is known as the Carmack Amendment, applicable to railroads applies to the domestic inland leg of an international shipment under a through bill of lading and the Carmack Amendment would override the Tokyo forum-selection clause that’s because Carmack specifies that suits must be brought in specific locations in the United States.

So the question is whether the Carmack Amendment does apply to the domestic inland leg of this shipment?

We conclude that it does not.

Carmack only applies if a rail carrier is required to issue its own bill of lading and Carmack only requires that a receiving rail carrier issue their own bills of lading.

All that means is, all this means is the we have to decide whether Union Pacific was a receiving carrier and we hold that it was not, that is because the cargo had been first delivered to “K” Line and it was not a rail carrier covered by Carmack.

If Carmack’s bill of lading rules refer to any rail carrier that in the colloquial sense received the property from another carrier, then every carrier during the shipment would have to issue its own separate bill of lading.

This would be altogether contrary to Carmack’s purpose of making the receiving and delivering carriers liable for any damages under single initial bill of lading.

Indeed, this wouldn’t affect outlaw through shipments under single bill of lading in circumstances like this.

Now whether text of a statute permits congressional enactment should be construed to be consistent with one another and the opinion points out that the interpretation of Carmack that the court now adopts, attains the most consistency between Carmack and a second Federal statute, the Carriage of Goods by Sea Act, that statute is known as COGSA and COGSA applies of its own force only to ocean carriage but the statute explicitly states the parties can extend COGSA’s terms by contract, that is what the parties did here.

COGSA unlike Carmack would allow the Tokyo forum-selection clause.

The court gives practical reasons in support of its statutory construction and in some because the journey here included no receiving rail carrier that was required to issue bill of ladings under Carmack.

That statute does not apply.

The parties’ agreement to litigate these cases in Tokyo is binding.

The cargo owners must abide by the contracts they made.

The judgment of the Court of Appeals is reversed.

The case is remanded for further proceedings consistent with this opinion.

Justice Sotomayor has filed a dissenting opinion in which Justices Stevens and Ginsburg have joined.